Governance can be broadly defined as the set of traditions and institutions by which authority in a country is exercised. This includes (1) the process by which governments are selected, monitored and replaced, (2) the capacity of the government to effectively formulate and implement sound policies, and (3) the respect of citizens and the state for the institutions that govern economic and social interactions among them.
The WGI measure six broad dimensions of governance:
1. Voice and Accountability (VA) – capturing perceptions of the extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media.
2. Political Stability and Absence of Violence/Terrorism (PV) – capturing perceptions of the likelihood of political instability and/or politically-motivated violence, including terrorism.
3. Government Effectiveness (GE) – capturing perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies.
4. Regulatory Quality (RQ) – capturing perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development.
5. Rule of Law (RL) – capturing perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence.
6. Control of Corruption (CC) – capturing perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests.
The Worldwide Governance Indicators were updated every two years between 1996 and 2002. After 2002, they are updated on a yearly basis.
No, 1996 will remain our starting year. As we go back in time, we would have to drop several of our sources as they became available only in recent years. Dropping sources would decrease both the precision of our estimates (i.e. higher standard error) and the interpretation of changes over time (as a country relative position could be affected by the subtraction of sources rather than an actual change in its performance).
The WGI are based on a large number of different data sources, capturing the views and experiences of survey respondents and experts in the public and private sectors, as well as various NGOs. These data sources include: (a) surveys of households and firms (e.g. Afrobarometer surveys, Gallup World Poll, and Global Competitiveness Report survey), (b) NGOs (e.g. Global Integrity, Freedom House, Reporters Without Borders), (c) commercial business information providers (e.g. Economist Intelligence Unit, Global Insight, Political Risk Services), and (d) public sector organizations (e.g. CPIA assessments of World Bank and regional development banks, the EBRD Transition Report, French Ministry of Finance Institutional Profiles Database). For a complete list of sources used in the current update of the WGI, click here.
Yes. On the interactive website, in the “table view” click on country scores to expand the view to display the source data for each score. Source data can also downloaded for all countries here. All source data for a single country can be downloaded in the Country Data Sheets available here. Source data are displayed on a common 0-1 scale. Please note that the source data in these units are comparable over time, but not across sources. See Section 4 of "The Worldwide Governance Indicators: Methodology and Analytical Issues" for details.
A description of the variables contributing to each of the six aggregate WGI measures can be found by clicking on their names:
For a description of each data source and access to underlying data click here.
All measures of governance and the investment climate are unavoidably imprecise. The WGI capture this imprecision by showing margins of error with countries scores that capture the statistically-likely range of values of governance. These margins of error reflect the extent of agreement among the underlying data sources: when data sources tend to agree, the margins of error are smaller, and when they disagree, margins of error are larger.
Margins of error are also smaller for country estimates based on more data sources. For example, margins of error for a country estimate based on just one data source would be more than twice as large as for a country estimate based on five data sources. A typical country estimate in the WGI data in recent years is based on 11 separate data sources.
These margins of error reflect the reality that governance is difficult to measure using any kind of data.
In most measures of governance or the investment climate they are however left implicit or ignored altogether.
The interactive WGI website clearly reports 90 percent confidence intervals for all country governance estimates.
The margins of error have declined over time as the number of data sources on which the WGI are based has increased.
For details on the construction and interpretation of these margins of error please refer to Section 4 of "The Worldwide Governance Indicators: Methodology and Analytical Issues".
When comparing two countries, or one country at two points in time, it is important to take margins of error into account.
A useful rule of thumb is that if the two confidence intervals overlap, the difference between the two countries or two points in time is not statistically, or likely practically, significant.
Put differently, when changes in the aggregate governance scores are small relative to the reported margins of error, they should not be over-interpreted – in such cases the WGI data are not informative about trends in governance, or differences across countries.
Yes. For approximately two-thirds of all possible pairwise country comparisons on the WGI, margins of error reflecting 90% confidence intervals do not overlap, indicating statistically significant differences. Looking at changes over time over long periods such as a decade, typically around 8 percent of countries covered will show a significant improvement or decline in the WGI measures. However, many small changes over shorter periods, or small differences between countries with similar ranks on the WGI, are not significant and should not be overinterpreted.
Changes in governance over short year-to-year periods are difficult to measure with any kind of data, and are typically quite small. Recognizing this, users of the WGI should in most cases not focus on short-run year-to-year changes but rather in trends over longer periods.
As with comparisons across countries, comparisons of governance scores for one country over time need to take into account margins of error: if confidence intervals for governance estimates in two periods overlap, the WGI data should not be interpreted as signaling meaningful changes in governance. The vast majority of year-to-year changes in the WGI are too small relative to margins of error to be viewed as statistically, or practically, significant, and so should not be over-interpreted as indicating a significant change in governance performance. However, over longer periods of time such as a decade, the WGI data do show significant trends in governance in a number of countries.
Changes over time in a country’s score on the WGI reflect a combination of three factors (i) changes in the underlying source data, (ii) the addition of new data sources for a country that are only available in the more recent period, and (iii) changes in the weights used to aggregate the individual sources. For large and statistically significant changes over long periods of time, changes in the underlying source data are most often the most important of these three factors. For the many smaller and often insignificant changes over shorter periods, a combination of all three factors contributes to changes in country scores.
Full access to the individual underlying data sources via www.govindicators.org can help users better understand the reasons for changes in the aggregate indicators for a particular country.
Individual questions from the underlying data sources are assigned to each of the six aggregate indicators. For example, a firm survey question on the regulatory environment would be assigned to Regulatory Quality, or a measure of press freedom would be assigned to Voice and Accountability. A full description of the individual variables used in the WGI and how they are assigned to the six aggregate indicators is available at www.govindicators.org. Multiple questions from the same source are also averaged together.
Each one of the six aggregate WGI measures are then constructed as a weighted average of the rescaled data from the individual sources, using a statistical technique known as an unobserved components model (UCM). The rescaling of the variables reflects the fact different indicators use different explicit and implicit units to measure governance. The weights in each year reflect the pattern of correlation among sources in that year: the UCM assigns more weight to sources that are more correlated with each other and sources that are less correlated get less weight. Weighting the indicators in this way improves the precision of the aggregate indicators but matters relatively little for the ranking of countries, which is very similar using unweighted averages.
For details, please refer to Section 4 of "The Worldwide Governance Indicators: Methodology and Analytical Issues".
The WGI measure governance in units where the average score for the world as a whole is zero in every period. Therefore, the six composite WGI measures cannot be used to study trends in world averages of governance, although they can of course be used to compare countries’ performance relative to one another.
To gain insights into trends in global averages of governance it is necessary to consult the data from the underlying sources. Over the past several years we have documented that global averages of individual data sources show no clear pattern of systematic improvements or declines. This observation can be used to justify our choice of units for the WGI where the world average is constant over time
This indicator does not measure how long a particular government has been in power. Instead, it captures perceptions of the likelihood of politically-motivated violence, including terrorism. Thus the United States for example has a sharp decline in this dimension between 2000 and 2002. This happened not because the political process in the United States is now perceived as more unstable than in the 1990s. Rather, it reflects perceptions of the risk of terrorist attacks on the United States that increased sharply following the events of September 11, 2001. Similarly, countries that are functioning democracies, but are marred by domestic politically-motivated violence, may also not score well on this indicator.
The six composite WGI measures are useful as a first tool for broad cross-country comparisons and for evaluating broad trends over time. However, they are often too blunt a tool to be useful in formulating specific governance reforms in particular country contexts. Such reforms, and evaluation of their progress, need to be informed by much more detailed and country-specific diagnostic data that can identify the relevant constraints on governance in particular country circumstances. We therefore view the WGI as complementary to a large number of other efforts to construct more detailed measures of governance, often just for a single country. We also encourage users to consult the disaggregated individual indicators underlying the composite WGI scores to gain more insights into the particular areas of strengths and weaknesses identified by the data.
The views and perceptions of firms and households matter because they make decisions based on them. Households will not use the police if they perceive the police to be corrupt. Firms will not use the courts and opt for informality if they view the benefits of the formal sector as being small. Perceptions-based data are a valuable tool for capturing the realities of governance outcomes "on the ground", which may be very different from the formal rules "on the books" that can be captured with objective data. In some areas, notably corruption, it is nearly impossible to measure governance in any other way than by relying on the experiences and views of informed respondents.
The distinction between “subjective” and “objective” measures of governance and the investment climate is mostly a superficial one, as nearly all such measures rely on judgment and/or legal opinions and experiences of respondents in varying degrees.
The entire WGI dataset is publicly available and downloadable here.